Trained Workers Critical
Coal Leader: We are talking with Mike Quillen, President & CEO, Alpha Natural Resources. Mike, we appreciate you talking to the readers of Coal Leader. As president of one of the fastest growing coal companies in the United States, would you begin by telling us please about Alpha Natural Resources and your vision for its future?
Mike Quillen: Alpha was formed in 2002 and is the result of the acquisition of Pittston Coalís Virginia assets, El Paso Gasís Coastal Coal operations, and AMCIís North America mining assets and domestic brokerage business. We are headquartered in Abingdon VA. We will mine and process approximately 21 million tons ourselves and sale approximately 27 million tons in 2004. We currently operate in five states: Virginia, West Virginia, Pennsylvania, Kentucky, and Colorado and have approximately 2400 employees. Our vision is to operate a safe, environmentally conscience and profitable coal company with emphasis on our employees, our owners, our lenders and the public.
Coal Leader: Alpha Natural Resources has acquired several companies this year, could you tell our readers about these acquisitions?
Mike Quillen: As mentioned above Alpha acquired the majority of Pittstonís Virginia assets in December 2002, and El Pasoís Coastal Coal operations in Virginia and West Virginia in January 2003 and took in AMCIís coal operations in West Virginia, Colorado and Pennsylvania plus its domestic brokerage company based in Latrobe PA in March 2003. In November 2003 we acquired the Mears companies in PA and in the second quarter of 2004 we acquired the Cooney preparation plant and Mooravian surface mines in PA.
Coal Leader: Where does Alpha Natural Resources have reserves in this country? Are there any international holdings?
Mike Quillen: Our reserves are in Virginia, West Virginia, Kentucky, Pennsylvania, and Colorado. We recently invested in a start up mining operation in Venezuela.
Coal Leader: Mike, how did you get involved in the coal industry? Tell us about your background.
Mike Quillen: I am a graduate engineer (Virginia Tech) and came into the coal industry in the early seventies when my father invested with some partners in a small mine in southwest Virginia. Coal Mining is all I have done for the last 33 years.
Coal Leader: What is your overview of the coal industry?
Mike Quillen: I am optimistic about the coal industry going forward. We experienced a very rough period from a financial perspective as an industry from the early eighties to just recently. As an industry we did not generate a return on investment and there was serious reduction in mining employment particularly in the east. As you know over fifty percent of the electricity in the United States is generated from coal. With a very predictable growth in electricity generation of two percent per year coupled with nuclear capacity at max, high natural gas prices, limits on future hydrologic generation and solar/wind generating a nominal two-three percent, our country will continue to need coal for decades. The US economy and in particular to be competitive on a global basis we need to
maintain our position as a low cost energy country. We rightfully require high safety and environmental standards plus competitive wages and benefits for the work forces so to compete with countries that donít aspire to those objectives we need an energy advantage. Coal gives the country that advantage.
Coal Leader: Do you feel the industry will over produce again flooding the market, as it has in the past, causing a drop in the prices? If so, is there anyway to prevent this from happening?
Mike Quillen: Actually I think if we could, we would over produce because we always have. It is just our nature to produce as much as we can. However, I think as an industry we are prevented from damaging ourselves at this stage. There are numerous impediments to increasing production such as a limited labor pool, difficulties in securing bonding, permitting issues, transportation issues, capital constraints, and consolidation within the industry generating some discipline not seen previously.
Coal Leader: What are some of the major issues facing the coal industry today?
Mike Quillen: All of those listed above, the most critical, of which, I believe is labor. Our industry lost a generation of miners during the retrenchments in the late eighties and all of the nineties. The average work force is approximately 50 years old particularly the underground miners. These individuals will need to be replaced with safe working productive miners in a few short years.
Coal Leader: Research and development is so important to the mining industry, could you tell us your thoughts for mining thin seams?
Mike Quillen: Certainly in the central and northern Appalachia coal regions we are going to have to get better at mining the thinner seams as that is the majority of the reserve base above drainage. We donít have a productive means of haulage in the thin seams that matches what we can do in the plus forty inch seams. Currently we are suffering very low recovery rates in the thinner seams which goes directly to cost. These seams will be mined by some method going forward we just have to find a more economic method to compete with other sources of coal from the west or imports.
Coal Leader: We would not want to complete this interview without a discussion on greater safety and health. Tell us the role of safety and health within Alpha Natural Resources.
Mike Quillen: Safety is our number one priority and we start every meeting with a discussion of our safety performance. It is our position that safety is not only the right thing to do for our employees it is also the positive thing to do from an economic standpoint. We will never be satisfied with our safety performance until we can achiever zero accidents.
Coal Leader: As the electricity needs increase, the need for coal also increases, do you see the two industries joining together working on critical issues, if so what issues?
Mike Quillen: That has not necessarily been the case in the past and there has been some tension as the market has so dramatically shifted but I am beginning to see dialogue starting in that direction now. I think that there are several major issues that the coal and utility industry can collaborate on, among which are clean coal technology, fly ash disposal, inventory control which leads to both parties working capital, new generation, quality of coal required, SO2 and NOX credits, etc.
Coal Leader: You have talked about the shortage of trained mining personnel, could you please share your views about this and how can the industry ready itself to meet this critical shortage?
Mike Quillen: As previously mentioned I feel this is the most critical issue to our industry. Our company is being proactive in the recruitment of new inexperienced miners. We are conducting job fairs in all of our operating regions and are going to add inexperienced miners throughout our operating divisions for training. We donít necessarily have open positions at this time but I know we will need to replace our retiring productive miners in the future. There is about a two year learning curve to grasp all the skills necessary for underground mining. We have been extremely pleased with the turnout at these fairs. We are also pleased that a significant percentage of the applicants are sons, daughters, or other relatives of our existing employees. We donít feel there is a better endorsement of the company than that legacy.
Coal Leader: Mike, thank you very much for taking time to talk to the readers of Coal Leader. We would like to take the opportunity of wishing you and your company every success as you lead Alpha Natural Resources into the future.
Mike Quillen: Thank you. cl
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